At MBIFL 2026 — the Mathrubhumi International Festival of Letters, conversations about the future extended far beyond literature and culture, finding resonance in how India is preparing for the next phase of mobility.

One such discussion unfolded during the session ‘Driving the future: the new era of luxury mobility’, moderated by Hormaz Sorabjee, where industry leaders examined how policy decisions are shaping the luxury car market in India.

Among the themes that stood out sharply was Kerala’s approach to taxing electric vehicles, particularly in the luxury segment. While electric mobility is widely positioned as a cleaner, future-ready alternative, Kerala’s current road tax structure tells a more complicated story.

BMW Group India President and CEO Hardeep Singh Brar pointed to the sharp disparity between Kerala and the rest of the country “Nationally, electric vehicles account for about 21% of our sales. In Kerala, that number drops to around six or seven percent,” Brar said.

Unlike several Indian states that continue to offer full road tax exemptions for electric vehicles, Kerala levies a 10% road tax on EVs priced above ₹20 lakh. In the luxury category, this threshold is crossed almost immediately, making nearly every premium electric model subject to additional taxation.

This policy has had a visible impact on adoption patterns. While electric vehicles form a significant and growing share of luxury car sales nationally, Kerala’s numbers remain comparatively low. The gap, industry leaders suggest, has less to do with consumer hesitation and more to do with affordability signals sent by state policy.

“If we are serious about growing the electric vehicle market, especially in a state like Kerala, we should allow the category to evolve before imposing such taxes,” Brar said. “EVs are good for the environment, good for people, and they need a push—not a penalty.”

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Luxury electric vehicles often serve as the entry point into the premium segment. For many buyers, EVs reduce traditional anxieties associated with luxury ownership—high fuel costs, maintenance complexity, and long-term running expenses. Electric cars offer predictability, quieter performance, and lower cost per kilometre, making them attractive to first-time luxury buyers.

However, when higher road tax is added upfront, that advantage narrows. Buyers comparing prices across states immediately notice the difference, which can influence where purchases are registered and how brands prioritise regional investments.

The implications go beyond individual sales. Slower luxury EV adoption affects the broader ecosystem—charging infrastructure expansion, dealership confidence, and consumer exposure to electric technology. When adoption remains limited, ancillary growth also slows, creating a cycle that is difficult to reverse.

“Electric cars take away many of the apprehensions—maintenance costs, fuel expenses, unpredictability. Once the initial price is paid, the running costs are extremely low.”

Another concern raised during the session was timing. Electric vehicles, especially in the luxury space, are still evolving in India. Many industry voices believe that taxation should follow maturity, not precede it. Early adoption phases, they argue, require encouragement rather than revenue extraction.

As Brar noted, “Policy consistency matters. If taxation comes too early, it discourages adoption at exactly the stage where the market needs nurturing.”

Kerala’s policy also places it out of alignment with national ambitions around clean mobility. As central and state governments emphasise emission reduction and sustainability, inconsistent regional taxation risks undermining these broader goals.

The discussion at MBIFL 2026 highlighted a crucial tension: the difference between intent and execution. While Kerala’s environmental aspirations are often articulated, the road tax structure sends a conflicting message to consumers and manufacturers alike.

As luxury brands increasingly position electric vehicles at the heart of their future strategies, states that offer supportive policy environments are likely to see faster growth, stronger infrastructure development, and greater consumer engagement.

For Kerala, the question remains whether its current approach reflects a short-term revenue view—or whether a recalibration is possible to align taxation with long-term sustainability and mobility goals.